Vietnam Labor Strikes Scare Foreign Companies

Foreign companies have flocked to Vietnam, drawn in part by its $2-a-day workforce, but a recent wave of strikes has sent a shiver through both the business community and government. For three months, tens of thousands of workers have temporarily shut down more than 100 plants, many of them around southern Ho Chi Minh City, to demand better pay and conditions and the right to form independent unions.

The latest walkout occurred April 6 in the former Saigon, where half of the 170 drivers of a Japanese-invested transport company stopped working to get higher overtime bonuses.

Although the strikes have eased off in recent days, "foreign investors remain vigilant," said Alain Cany, president of the European Chamber of Commerce in Vietnam. "Vietnam is in a transition period."

"Vietnam's good reputation as an investment and sourcing destination... has been seriously damaged," the business associations wrote. "Unless the situation is resolved quickly and satisfactorily, the damage may be hard to repair." At a meeting last week organized by the American Chamber of Commerce in Ho Chi Minh City, one Asian businessman said his company had postponed a planned $12 million investment because of the strikes.

The unrest increased pressure on communist Vietnam's government as it seeks to integrate into the world economy and create work for over one million new job seekers a year while maintaining its role as the guardian of the workers. From February, Hanoi ordered foreign companies to raise the minimum wage by 40% to $55 a month in the country's two biggest cities and some other industrial areas, the first such increase since 1999.

Copyright Agence France-Presse, 2006

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